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Credit Suisse’s current market cap is $10.8 billion. In October 2021, it was over $25 billion.
In a memo released by the bank’s CEO, Ulrich Koerner, to the staff, he assured them that the bank has a strong capital base and liquidity position. However, the bank’s share price continued the nosedive.
There are several factors responsible for the crisis at Credit Suisse.
Also, Credit Suisse’s losses have widened in the last two quarters. It reported a loss of 1,907 million Swiss francs in Q2FY22. In Q1FY22, the losses stood at 1,326 million Swiss francs.
The bank gave money aggressively to Archegos’ boss, Bill Hwang. However, the company soon collapsed. Credit Suisse failed to exit on time and lost over $5.5 billion.
Cumulatively, the bank has reportedly lost nearly $10 billion in the two cases alone, which is equal to its current market cap.
In 2020, then-CEO Tidjane Thiam was forced to quit after a spying scandal surfaced at the bank. Switzerland’s financial regulator said that the bank misled it about the scale of its surveillance.
Urs Rohner, former bank chairman, quit the office in 2021 after admitting that the bank had disappointed clients and shareholders.
Currently, Axel Lehmann is the chairman of the bank.
The credit default swap (CDS), a bet on whether the borrower will survive or not, has touched the highest level since the 2008 crisis for Credit Suisse. It widened to 250 basis points. It was 57 basis points at the beginning of 2022. This simply means that not many investors are ready to bet on Credit Suisse’s survival.
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